Page 74 - DMGT553_RETAIL_STORE_MANAGEMENT

Unit 4: Store Opening and Closing

Notes
replacement fixture in the store. Now the customer receives new fixtures within days of
placing the order online.
Using a third party for technology, consolidation and logistics support has allowed the
customer to convert many fixed expenses into variable expenses. This has not only reduced
their risk exposure, but also generated bottom-line savings.
As a result, the customer decided to close down their remaining fixture warehouse and
allow SOS to manage all of their consolidations, fixture replenishment, and point-of-
purchase display programs.
Reduces Time to Open Store

Customer Description
Receive all fixtures for new store openings
Maintain fixture inventory to cover 6–12 months of store openings

Complete any freight claims for customer
Consolidate shipments into TLs
The specialty retail operations of the customer consists of retail stores selling a wide
variety of furniture, wicker, decorative home furnishings, dining and kitchen goods,
epicurean products, bath and bedding accessories, candles and other specialty items for
the home.

Customer Issue
This retail chain had tried all options over the years, from warehousing and transporting
fixtures in-house to using temporary local warehouses. Under the latter plan, vendors
drop-shipped the equipment directly to the warehouses starting about four to five weeks
before occupancy. The system worked will in some locations, but the overall accuracy was
poor.
The frantic phone calls from the customer’s field staff on occupancy days regarding missing
and damaged fixtures were a problem. Corporate personnel spent a large amount of time
expediting, tracing, and reshipping orders.
Solutions Overview

The customer now issues blanket purchase orders to its fixture vendors that cover six
months to a year’s worth of its fixture needs. SOS allocates the needed amount of space in
its warehouse, along with dedicated staff. SOS takes full responsibility for the inventory.
If something is delivered damaged, SOS completes the freight claims on behalf of the
customer. When it comes time to replenish inventory, SOS coordinates with the customer’s
vendors to consolidate shipments, resulting in full truckloads.
Improvements Realized

By utilizing the services offered by SOS, the savings resulted in about $5,000 in hard costs
per store opening, in addition to savings of substantial soft costs.
Using SOS has reduced the customer’s store-opening costs, as well as minimized warehouse
and transportation overhead and additional costs, including emergency overnight air
shipments associated with late deliveries. The fixtures arrive on time with every piece
accounted for. Overall, the estimated annual savings to the company were close to
$1 million, which goes straight to the bottom line.

Contd....

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